LuLaRoe to Pay $4.75M to Resolve Pyramid Scheme Claims in Washington

Multilevel purveyor of leggings and other flexible fashion items, LuLaRoe, will pay $4.75 million to settle a lawsuit with the Washington State attorney general’s office alleging that the company’s pay structure constitutes a pyramid scheme.

Approximately 3,000 Washington residents who signed up to sell LuLaRoe products between 2016 and 2019 will be awarded $4 million of the settlement agreement, according to the attorney general’s office.

The multimillion-dollar agreement comes in response to allegations that the California-based company left thousands of its independent retailers in a mountain of unsold product and debt by deceiving Washington retailers about how profitable they would be.

The Attorney General’s office claimed the LuLaRoe pyramid scheme violated state law, alleging that the company deceived retailers about how much they could earn in addition to the company’s buyback policies.

“Every Washington retailer who lost money under LuLaRoe’s pyramid structure will receive restitution,” the Washington news release by the Washington attorney general’s office of the LuLaRoe settlement.

The state attorney general’s office lodged the complaint in 2019. Under the terms of the settlement, LuLaRoe admits no wrongdoing but has agreed to be more forthcoming about its payment and return policies.

LuLaRoe Legal Actions

While Washington state’s attorney general took action on behalf of its residents, a flurry of class action lawsuits were alos filed in other states alleging a LuLaRoe pyramid scheme worked to enrich a few top executives.

In California, a pair of class action lawsuits were lodged against the company. One, filed in 2017, took issue with LuLaRoe’s “100% Buy Back” pledge, claiming that consultants were left holding thousands of dollars in unsold products.

Another set of California plaintiffs alleged the LuLaRoe pyramid scheme bilked them and others out of $5,000 or more with false promises of a successful business. That LuLaRoe lawsuit, which was voluntarily dismissed in January 2018, claimed that those that signed up to sell LuLaRoe actually made more by signing on other consultants than selling product.

LuLaRoe has also faced allegations it sold shoddy merchandise in Oregon, with a consumer claiming that her leggings developed runs the first time she wore them, The Oregonian reported.

Recently, the legging dealer lost a bid to dismiss a class action lawsuit over sales tax. LuLaRoe allegedly charged Alaska residents sales tax for purchases they made in a no sales tax state, forcing the consultants in that state to put hundreds of dollars aside to pay the non-existent tax.

Are you a Washington state LuLaRoe retailer? What do you think of the LuLaRoe pyramid scheme claims? Tell us in the comment section below!

Read About More Class Action Lawsuits & Class Action Settlements:

• LuLaRoe Class Action Lawsuit Challenges 100% Buyback Promise
• LuLaRoe Class Action Says Company Operates as a Pyramid Scheme
• Clothing & Restaurant Coupon Text Lawsuit Investigation
• Credit and Debit Card Receipt Privacy Lawsuit Investigation